A car’s taxable value is known as its P11D price, which is the list price including options, VAT and delivery charges. But unlike a manufacturer’s quoted on-the-road price, the P11D doesn’t include the first-year registration fee.
A zero-emissions car costing £40,000 would have a BIK value of £40,000 x 2%, equating to £800 per year. A driver’s tax level is the third factor, so a higher-rate 40% tax payer would then multiply the £800 by 40% to get their liability; £800 x 40% equalling £320 per year, or £26.67 per month. Halve that for a lower-rate 20% tax payer, so £13.31 per month.
At £26.67 per month for a £40,000 electric company car against almost £500 a month for a petrol or diesel alternative costing the same, it’s clear why more and more company car drivers are choosing to go electric. The potential savings under the current tax system amount to more £17,000 in company car tax over three years.
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